Econit says govt loath to give more to provinces

JAKARTA (JP): The bill on striking a financial balance between the central government and provincial administrations will not affect the government's management of revenue generated from natural resources, according to consultancy firm Econit.

Econit director Arif Arryman said on Wednesday the government's lack of commitment to sharing the resources was reflected in the fact that the bill, currently being debated by legislators, did not have a clear-cut revenue sharing formula.

The bill also indicated that the government is unwilling to empower economic activities in the provinces, he said

The bill states the revenue-sharing formula will be detailed in the regulation to be drafted by the government after the enactment of the law.

Arryman said he was afraid the government might compose a formula in conflict with the public's demand for a greater share in the revenue and called for revision of the bill.

"The law on striking a fiscal balance should specify the revenue-sharing formula to ensure the government will fairly share the revenue with the local administrations."

Arryman said revenue sharing is currently a sensitive issue which could lead to the country's disintegration if not properly addressed.

Protests have escalated in several natural resource-rich provinces including Aceh, Riau and Irian Jaya over the perceived unfair distribution of revenue by the central government. Calls for independent provinces have been fueled by the debate.

The oil and gas bill, also being debated by the House of Representatives, likewise does not provide a clear-cut revenue sharing formula.

Arryman said the bill on striking a fiscal balance between the central government and local administration, as the overarching law on natural resources, must provide a revenue-sharing formula for a variety of natural resources, including oil, gas and mining assets.

"The oil and gas bill must refer to the bill ... in terms of a revenue-sharing formula."

Econit researcher Tri Handoyo said the fiscal balance bill was cursory and warned that the government could compose regulations in conflict with the decentralization spirit.

"The bill was drafted by New Order officials who could not rid themselves of their centralistic perspective," he said.

On Wednesday, an economist from Gadjah Mada University in Yogyakarta, Revrisond Baswir, said people in the provinces were concerned about the central government's grip on the country's economy.

"Allegations that 30 percent of the state budget has been abused have strengthened people's doubt over Jakarta's ability to manage the country's money," Revrisond said at a seminar on the economy organized by the Institute of Economic and Development Analysis in Yogyakarta.

According to Revrisond, at least 95 percent of state revenues were controlled by the central government, leaving about five percent in the hands of provincial administrations. (jsk/23)